8. intangible assets

Intangibles includes certain fully amortised / impaired brand names and rights and customer lists.

9. goodwill

The goodwill arose on the acquisition by the Group of Vedder which is related primarily to the value of the synergies of the combined business operations, new customers relationships, growth opportunities and skilled labour. Goodwill is not tax deductible for tax purpose.

Goodwill has been allocated to the groups of cash-generating units which are the lowest level at which goodwill is monitored for internal management purposes.

Goodwill allocation to group of cash-generating units is as follows:

(a) Annual test for impairment

The Group carried out an impairment test for goodwill allocated to Vedder during 2022. The recoverable amount of the cash generating unit has been estimated and is based on the higher of fair value less cost to sell or value in use calculated using cash flow projections approved by senior management covering a five-year period. The cashflow projections beyond the five-year period is extrapolated using the growth rate mentioned overleaf. Management concluded that no impairment was required.

(b) Key assumptions used

The calculation of the value in use is sensitive to the following assumptions:

• Growth rate; and

• Discount rate.

• Earnings before interest and tax (EBIT) rate.

Growth rate: Estimates are based on historic performance, approved business plan, backlog and prospective projects. An average growth rate of 4.3% per annum was used in the estimates.

Discount rate: Discount rate used throughout the assessment period was 11.4%, reflecting the cash generating unit estimated weighted average cost of capital and specific market risk profile and cost of debt. Segment-specific risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly available market data.

EBIT rate: EBIT rate used throughout the assessment period was 8.3% reflecting historic average EBIT of the Vedder.

At 31 December 2022, if the growth rate or EBIT rate had decreased by 2% or discount rate increased by 2%, the recoverable amount of the cash generating unit exceeded the carrying value of the goodwill.